Other banks too are likely likely to cut interest rates as cost of funds has come down following RBI slashing short term lending (repo) rate by 0.5 per cent on April 17. "For better transmission of monetary policy measures declared by RBI in its annual monetary policy on April 17, PNB has reviewed its lending rates and decided to revise downwards base rate by 25 basis points from 10.75 per cent to 10.50 per cent and Benchmark Prime Lending Rate (BPLR) to 14 per cent from 14.25 per cent, to lessen the interest burden on esteemed customers," the bank said in a statement.
Consequent upon the reduction, all lending rates linked to base rate and BPLR will also get reduced accordingly, it said. The base rate is the minimum interest rate below which banks can`t lend. Besides, PNB has also decided to slash interest rate on term deposits of less than Rs 1 crore by 0.25-0.50 per cent in select buckets. ICICI Bank`s base rate or the minimum rate of lending, stands reduced by 25 basis points to 9.75 per cent, while the prime lending rates also saw a similar reduction to 18.50 per cent.
ICICI Bank has also announced a decrease in interest rates for various tenors of fixed deposits by 0.25 per cent. The revised rates are applicable from April 23, the bank said. "With the easing of systemic liquidity, we have already seen some correction in wholesale deposit rates. We expect the cost of funds to gradually come down and this reduction in the lending rates is a proactive move by us to pass on the benefit to our valued customers," ICICI Bank CEO Chanda Kochhar said in a statement.
In addition to the benefit of reduction in base rate, PNB has also decided to further reduce its interest rates on housing loans and car loans to give fillip to retail segment, it said. The housing loans up to Rs 75 lakh will carry an interest of 10.75 per cent and for loans above Rs 75 lakh the rate will be at 11 per cent, irrespective of tenor of repayment. Car loans will be priced at 12 per cent, it said.
This reduction has been made applicable to the new as well as existing customers, it said. PNB said the new rates would be effective from May 1. Another public sector lender, Bank Of Maharashtra, has also decided to reduced its base rate by 0.1 per cent. The bank has reduced base rate from 10.60 per cent to 10.50 per cent effective May 1, 2012, Bank of Maharashtra said in a statement. IDBI Bank had announced cut its lending and deposit rates on Wednesday. It is to be noted that RBI reduced the repo rate to 8 per cent from 8.5 per cent in its monetary policy on April 17 with a view to boost sagging growth.